P2P Forum

Prosper Discussion => Investors - P => Topic started by: Rob L on June 03, 2017, 11:00:00 PM

Title: Worst Month Yet, Prosper Version
Post by: Rob L on June 03, 2017, 11:00:00 PM
These charts were kept up to date until about a year ago when I started ignoring Prosper.
Since a new monthly statement just came out I thought it would be a good time to bring them up to date.

For the record my account was funded with one single investment in July of 2014. I used Prosper Quick Invest with a very small number of filters that selected only A and B notes, $25 each.
When Prosper shut down Folio I'd had enough and discontinued purchasing notes in September of 2016.
My Prosper main page says my Annualized Net Returns are now 3.94% which seems close to the cumulative profit chart above.
Very roughly, 10.73% / ( 34 months / 12 months) = 3.79%.
I have no idea what it said before they fixed their problem, but I never believed it anyway. It was always way higher than anything I could compute.

Anyway FWIW:









Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on July 05, 2017, 11:00:00 PM
Again FWIW, another month --








Title: Worst Month Yet, Prosper Version
Post by: Bpoole99 on July 07, 2017, 11:00:00 PM
Don't know, but I am having great luck with Prosper.  I have over invested in more than 2000 loans and am getting >10% return coming up on my first anniversary.  I think the only way to go is to use the API.  The auto invest doesn't have adequate filtering and its far too tedious to do manually.
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on July 08, 2017, 11:00:00 PM
from: Bpoole99 on July 08, 2017, 06:11:50 PM
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on July 09, 2017, 11:00:00 PM
I have my own API that I wrote last year that uses about 20 criteria for choosing a loan.  These criteria were chosen to try to find borrowers with good payment history and solid (and higher) income.  I made an attempt to backtest the criteria, but in the end I think most are fairly common sense.  Since the criteria are very restrictive, I will on average only 1-5 loans purchased per day.  However, since it runs more or less constantly, I don't really have to think much about it.

What's the span of loan interest rates (constant over time where letter grades are not) in which you have invested? - I have only invested in loans with expected returns over 4.3%.  I don't know the breakdown off the top of my head, but the distribution of loans is probably centered around a B/C loan.
What are the percentages of 36 and 60 month loans you own?For quite a while I ignored term, but since April I have wanted to slow the growth in the account, so I only purchase 3 year loans.  This gives me slightly better liquidity and monthly cash flow should I need it.
How are you measuring >10% returns? I haven't donw any fancy analysis.  My Annualizsed Net Returns is 11.34% and Seasoned is 10.98%.  Lending Robot tells me my expected is 9.67%.  My back of the envelope calculations that I did at the end of June tell me that I have made over 5% on my average balance in the first half of the year
How much difference did you see on your web account summary page in "Annualized Net Returns" before and after Prosper fixed the bug they found in their computation of this metric?I don't recall a difference, but I had just started seeing that metric a couple of months prior, so I really hadn't paid too much attention
Finally, what were your thoughts when Prosper took away your ability liquidate your portfolio via FolioFn?Not something I ever looked into.  Of course I would prefer to be able to liquidate, but my preferred use of the platform is to create a constant cashflow

Since my average note is only 5-6 months old, my experience certainly could change as they mature.  Right now though, I am very happy with the platform.
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on July 09, 2017, 11:00:00 PM
Thanks, keep us posted from time to time.
Title: Worst Month Yet, Prosper Version
Post by: dbsb3233 on July 16, 2017, 11:00:00 PM
I'm having much better luck with Propser than LC.  While my real LC returns keep dwindling way down (4.6% in one acct and 2.8% in the other), my real Prosper returns are holding up fairly well around 7-8%.  Not great but good enough to keep me happy as a more consistent return and a hedge against the high volatility of the stock market.  I keep about half of my total portfolio in S&P500 funds and the other half in peer-to-peer lending (LC, Prosper, and Peer Street).

That's using a basic auto invest filter (not API).  My account page shows a 6.72% Seasoned return, 7.22% All-notes return.  The account is 3.5 years old.  I only buy 36mo notes.  I have ~1900 active notes, mostly B and C grade but some D/E/HR too.  It's a little tricky to calculate a "real" return (true account value over time) longer term since I've been adding funds to my P account as I'm draining my disappointing LC accounts.  But I do have two clean periods for comparison where no funds were added.  One is the last 4 months, where my account value increased 8.2% (annualized).  The other was a 9-mo period in 2016 (Apr-Dec) where I also experienced a real 8.2% annualized return.  I added funds early in 1Q2016 and 1Q2017 which took a few months to invest into notes so I don't have clean data points for those months.

I think I'm done adding more money, and I don't plan to withdrawal any for years, so I should be able to better track long-term returns from here on out.  If I can keep getting around 8% real return, I'll be happy.
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on July 16, 2017, 11:00:00 PM
Yeah, I agree. I've only lost money in three Prosper months, but many more in LC.
However, when Prosper took away my exit by shutting down Folio I decided to leave.
That was a deal breaker.
Title: Worst Month Yet, Prosper Version
Post by: .Ryan. on July 16, 2017, 11:00:00 PM
I noticed your returns are declining, please check out my YouTube video and please give my LC Investment strategy a try.  It is free for now in Beta!  :) . I'll post this in every other thread on this board as well, just in case.

JUST KIDDING!! Don't shoot!!

I have been investing in Prosper since 2014 as well, and stopped all reinvesting a few months back. All funds are now being withdrawn as they become available.

For me, the gross miscalculation of the returns and being a private company (little visibility into the health of the business) were strikes one and two.

The removal of the secondary market was the death knell. I wish I had sold out before that happened, but I didn't have the finger on the trigger like I should have. Now I am stuck with an investment with a 3-5 year liquidity horizon. I personally believe(no data to back this up, just common sense) that P2P investments could incur significant losses during a pullback in the economy, and if this happens within the next 4.5 years, I won't be able to do anything but painfully watch this bleed out.
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on July 16, 2017, 11:00:00 PM
from: .Ryan. on July 17, 2017, 08:35:16 PM
Title: Worst Month Yet, Prosper Version
Post by: Fred93 on July 16, 2017, 11:00:00 PM
from: .Ryan. on July 17, 2017, 08:35:16 PM
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on July 17, 2017, 11:00:00 PM
from: .Ryan. on July 17, 2017, 08:35:16 PM
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on July 17, 2017, 11:00:00 PM
from: dbsb3233 on July 18, 2017, 12:13:07 PM
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on July 18, 2017, 11:00:00 PM
from: Rob L on July 18, 2017, 07:25:47 PM
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on August 04, 2017, 11:00:00 PM
Another month and another set of charts (spoiler, there are no surprises).
If Prosper had not shut down Folio I think I'd still be investing there. Liquidity has value!















Title: Worst Month Yet, Prosper Version
Post by: Rob L on September 03, 2017, 11:00:00 PM
"And the beat goes on ..."  there must be a few old folks that remember.
Another profitable month (approx 3% APR on invested cash).
As a sanity check, does it seem appropriate that for every $3 of interest received $2 is lost to chargeoffs (A & B grades only)?









Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on October 07, 2017, 11:00:00 PM
A losing month. Three of past 6 months have lost money.








Title: Worst Month Yet, Prosper Version
Post by: SeanMCA on October 07, 2017, 11:00:00 PM
Yes, I'm negative YTD in Prosper just like Lending Club.
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on November 03, 2017, 11:00:00 PM
A slightly profitable month.









Edit: replaced charge offs chart; it was from last month.
Title: Worst Month Yet, Prosper Version
Post by: Bpoole99 on November 03, 2017, 11:00:00 PM
Folks, I don't understand...  My return continues to be great on Prosper.  I have about 2100 active loans(mostly 36 month term) and my dashboard shows an annualized net return of 10.18% and a seasoned annualized net return of 8.78%.  LendingRobot has me at a portfolio health of 98.74% and an expected return of 11.71%.  I haven't sat down to try to figure out my actual rates, but as of November 1st I have earned about 9% or so of my average balance this year, so those numbers pass the sanity test - or maybe even seem a bit low.  I have to think that your results are either due to purely using automated investing or lack of diversification.  I have spent a decent amount of time developing an algorithm and a program to choose notes daily to (at least try to) optimize both.

Right now, my biggest concern is the tax hit that I will take due to the way losses are treated compared to gains as this is my first full year being "fully" invested.  Otherwise very happy with Prosper and P2P investing.
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on November 04, 2017, 11:00:00 PM
Take a look at the cumulative profit chart between April 2015 when I became fully invested and September 2016 when I stopped reinvesting cash and began to let it accumulate in my account. The rise was about 8% over 18 months or about 5.3% annualized return and only one negative month. For a portfolio of only A and B loans this isn't bad and is about what I expected. Once I stopped reinvesting cash back into new notes the returns dropped dramatically also as expected. That's just the way it works.

As I've said before, I pulled the plug on Prosper when they discontinued participation in Folio, not because of poor returns. Personally I valued the knowledge that I had that liquidity should it ever be needed. Also I simply hate it when a company changes the rules in the middle of the game such as this and decided to vote with my feet. Prosper lost my confidence and hacked me off and at a time when I was considering moving my entire LC investment to Prosper. Really glad I didn't.

Now I'm stuck and presumably must wait for ALL of my notes to become inactive before closing my account. Checkout the cash balance in account chart and you will see it's starting to roll over, accumulating less and less of a percentage of cash each month. The curve will asymptotically approach 100% and it seems very likely to me that my account will only go to 100% cash 36 months after my last note purchase (all my notes are for 3 year loans). In the last few months there will be almost no notes but I still won't be able to close the account. With Folio I could have sold those last few notes at a big discount and closed the account. Very messy.

These charts just let folks see what the impact on returns and cash build up looks like when reinvestment of cash is stopped.

Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on November 04, 2017, 11:00:00 PM
I agree, but that's not a hit on Prosper, its just a reality of this investment class.  I don't use Lending Club, but I would expect something similar.  If Folio still existed, this "aging" effect would still play into the return you could get when you sell a note.  After all the note is only worth the present value of expected payments.

I don't know if this is a credible argument, but this effect is the reason why I stopped investing in 5 year notes.
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on December 06, 2017, 12:00:00 AM
Another month and nothing remarkable to report but this ...

I noticed that my profit was -$4.10 yet my income (interest + late fees + debt sales proceeds - chargeoffs - bankruptcies) was $12.46. So, why did I lose money?
Prosper Collection fees plus Service fees was $16.56. Take the $16.56 from the $12.46 and you get the reported loss of -$4.10.

Naturally that prompted me to take a look at Prosper's fees as a percentage of my profits over the lifetime of my account.
I've made a profit net of Prosper's fees of $5,492.44. Prosper's fees on these profits were $1,349.43 so my pre-fee profits were $6,841.87.
Prosper's fees have been $1,349.43 / $6,841.87 = 19.7% of my gross profits. !!!! WOW!!!!
These fees are the equivalent of over 20% of all my losses due to charge offs and bankruptcies.
Am I the only one who didn't know these fees were so expensive? I haven't looked at LC but that's certainly on the todo list.

Meanwhile the latest charts:









Title: Worst Month Yet, Prosper Version
Post by: bkcarolina on December 15, 2017, 12:00:00 AM
I also quit investing when they nixed the ability to liquidate (even though I never did so and had no plans to), so now twice a month I cash out and switch the funds to LC.
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on January 07, 2018, 12:00:00 AM
Another month bites the dust.
By the time I'm done with Prosper I'll probably be able to buy a 5 year CD at 3%, FDIC.








Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on February 04, 2018, 12:00:00 AM
No joy in Mudville. Gee I'm glad I only have about $11k remaining invested in Prosper notes.

And by the way, I can already buy that 3% 5 year CD I mentioned last month:
https://www.depositaccounts.com/banks/connexus-credit-union.html








Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on March 07, 2018, 12:00:00 AM
No surprises this month.
For those who say I took too much risk buying only LC D & E loans I say look at this.
For those who say my LC returns are depressed because I sold my best loans on Folio I say look at this (no Folio sales here).
All my Prosper notes were bought using the Prosper auto-invest feature (grade selection only, no filters). I simply relied on their underwriting.
My thesis doing this was that was that for "low risk" A & B loans there was little to be gained attempting to pick the "best" ones.
I have no idea if my thesis was valid. Since I bought a large number of loans (i.e. well diversified) my returns are likely in the middle of the pack.
The good news is that my invested principal balance is down to $9.6k, down from $11k last month.








Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on April 08, 2018, 11:00:00 PM
A modest profit this month and the beat goes on.
I'm just completing the move of essentially the entire current cash balance back to Fidelity.
The balances stand at about $8k notes and $2k cash.
The cash balance in account chart has been replaced with a chart of the history of the principal value of notes owned over time.








Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on May 05, 2018, 11:00:00 PM
And for April:








Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on May 05, 2018, 11:00:00 PM
Addition to April:

The above chart "Cumulative Profit as a % of Investment" should actually read "as a % of Initial Investment" (the whole amount).
Since I've been letting notes run off and accumulating cash, comparing profits to the entire initial investment is unduly pessimistic (even though I've only this month moved that cash out of Prosper). Call it my bad.

The following chart provides ROI (return on investment) that includes only the cumulative principal invested in each month versus the cumulative annualized profits in that month.

The chart appears entirely reasonable. I wasn't fully invested until Mar-15. Then there is 5-6 months before charge offs begin Aug-15. Then the decline of returns due to charge offs. There is no discontinuity where I stopped reinvesting. Fewer dollars invested less interest returned, just drop off as charge offs continue. Also my principal invested today is less than 8% of what it was at its peak. Whatever my returns are now they shouldn't move the overall needle much.

Prosper says my annualized returns are 3.36%. This looks a bit better:


Title: Worst Month Yet, Prosper Version
Post by: Rob L on October 24, 2019, 11:00:00 PM
A fitting end to this thread. One more note to go, principal outstanding $0.03.
As a reminder I stopped investing the moment Prosper arbitrarily withdrew from the Folio Platform and shut the door behind me in Sep 2016.
In hindsight they did me a favor! I didn't totally shut down LC until Jan 2017. "It was a bad call Ripley; a bad call." Burke, Carter J. Aliens.

Title: Worst Month Yet, Prosper Version
Post by: mrwhizzard on October 27, 2019, 11:00:00 PM
from: Rob L on October 25, 2019, 05:07:16 PM
Title: Worst Month Yet, Prosper Version
Post by: TravelingPennies on October 28, 2019, 11:00:00 PM
from: mrwhizzard on October 28, 2019, 02:28:17 PM